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Guide to Student Loans and Paying Rent

Guide to Student Loans and Paying Rent
Rebecca Safier
Rebecca SafierUpdated February 27, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Many students take out loans to cover the costs of college. In fact, 70% of students who earn a bachelor’s degree owe student loan debt by the time they graduate. But can you use student loans for rent? Yes, you can. In fact, you can use student loans to cover anything that goes into your cost of attendance, including room and board or rent for an off-campus apartment. Read on to learn about using a student loan to pay for rent, including the pros and cons of this approach. 

Can You Use Student Loans for Rent?

You can use student loans to pay for rent and other costs that come with attending college. Some common expenses for student loans include:
  • Tuition and fees 
  • Books and supplies 
  • A laptop or desktop computer. Personal loans for laptops are another option. 
  • Housing, whether that means an on-campus dorm or off-campus apartment 
  • Utilities 
  • Transportation 
  • Meal plans 
  • Groceries 
  • Living expenses
You can use student loans to cover almost anything you need while pursuing your degree. In fact, your lender probably isn’t going to monitor the ways you use your student loans. Instead, it’s up to you to use them responsibly and avoid overspending, since borrowing too much could harm your finances and lead to burdensome debt after graduation. 

Using Federal Loans to Pay Rent

The Department of Education offers various types of federal aid, which include federal student loans to students enrolled in qualifying schools. Federal loans come with a variety of borrower protections, including income-driven repayment plans and forgiveness programs. When you borrow federal loans, the government disburses the loans directly to your financial aid office. After the office applies your loans to tuition and fees, it will disburse the remaining funds directly to you. At this point, you can choose how to use the money, whether to use it to pay rent or for other expenses. If you borrowed more than you need, you can also return it. As long as you send it back within 120 days, you won’t have to pay interest charges on the amount. 

Using Private Loans to Pay Rent

Federal student loans should usually be your first choice when borrowing for college, since they’re eligible for a variety of repayment plans and other benefits. However, federal student loans come with borrowing limits, and you may need more money to pay for college.In this case, borrowing a private student loan from a private lender, such as a bank or online lender, could make sense. Most private lenders let you borrow up to your school-certified cost of attendance, minus the amount of aid you’ve already received.As with federal loans, private loans typically go to your financial aid office first. After the office has covered necessary expenses like your tuition bill, it will send the leftover funds to you, often as a direct deposit into your bank account.At this point, you can use the funds to pay for rent or other living expenses. 

Can You Only Use Student Loans for On-Campus Rent?

You can use student loans to pay for your living costs while you attend school, whether that includes on-campus housing or off-campus rent.As mentioned, with student loans, you can only borrow up to your school-certified cost of attendance, minus any other aid you’ve already received. Plus, you must be enrolled in a qualifying school or educational program to borrow a student loan. If you’re using student loans to pay for rent, it’s usually a good idea to opt for an affordable apartment with roommates rather than an expensive one. When you borrow loans, you have to pay back the amount you borrowed with interest. Taking on more loans than you need could cause financial difficulties after you graduate and potentially for years to come. One option that might help you save money on repayment is to refinance student loans you’ve taken out. If you qualify for a lower interest rate, your monthly payments may be less. Just be aware that refinancing federal student loans means you’ll lose access to federal programs and protections like student loan forgiveness.

Alternatives to Using Student Loans for Rent Payment

Can student loans be used for rent? Yes, they can. But if you’d rather not take on debt to cover rent, consider these alternatives to paying for housing: 
  • Build your savings. If you can spend some time saving for college before you attend, you may have money in your bank account to help cover your rent — or at least reduce the amount you need to borrow in student loans. 
  • Take on a part-time job. Working while you’re in school could help you earn enough to cover part or all of your rent payments. If you have financial need, you might qualify for a job through the work-study program. Alternatively, you could look for part-time jobs on- or off-campus, or search for online opportunities to make money. You may be able to find high-paying jobs for college students that cover part or all of your housing costs.
  • Opt for on-campus housing. Compare the costs of living in a dorm with renting an off-campus apartment carefully to see which one is more affordable. With rents rising across the country, a dorm could be the less expensive choice. Plus, dorms typically come already furnished and don’t require you to pay for utilities. 

How Does Using Student Loans for Rent Affect You?

Before relying on a student loan for rent, consider the ways this choice could affect your credit — and your relationship with your landlord. First, student loans will show up on your credit report. Making on-time payments could help you improve your credit over time, but late payments will drag it down. The amount you borrow in student loans will also affect your “amounts owed,” which makes up 30% of your credit score. Taking on too much debt can decrease your credit scoreAs for your landlord, some landlords might be hesitant to rent to students who don’t have a source of income. In this case, they might require a parent or other adult to cosign your lease agreement. As long as you pay your rent on time, however, using student loans to pay for rent shouldn’t be a problem. Landlords who rent to students are probably used to some of their tenants using loans to cover rent. 

Pros and Cons of Using Student Loans to Pay Rent

• Access the funds you need • Debt will impact your credit 
• May qualify for subsidized loans • Landlord may require a cosigner 
• Can use toward on-campus dorm or off-campus apartment • Will end up paying back more than you borrowed 
  • Access funds you need. Student loans can enable you to live on or near campus. They provide you with the funding you need to pay for rent and other living expenses. 
  • You may be eligible for subsidized loans. If you have financial need, you may qualify for federal subsidized loans, which don’t accrue interest until your grace period ends. 
  • You can use student loans for an on-campus dorm or off-campus apartment. You can live on-campus or off-campus and use the loans to pay your rent either way. 
  • Loan debt will impact your credit. Taking on debt will affect your credit and could decrease your credit score. That said, the impact could be positive in the long run if you consistently make on-time payments. 
  • The landlord may require a cosigner. If you’re relying on loans to pay rent rather than a source of income like a job, your landlord might ask for a cosigner on your lease agreement. 
  • You’ll end up paying back more than you borrowed. Most student loans accrue interest from the date of disbursement, meaning you could end up paying back significantly more than you borrowed in the first place. 

The Takeaway

As a student, you can use student loans to cover the costs of attending school, which include rent, utilities, and other living expenses. Before relying on a student loan to pay rent, however, it’s worth exploring ways to reduce your borrowing, such as working a part-time job. And compare the costs of living in a dorm with renting an off-campus apartment to see which one is more affordable. By keeping costs down where possible, you can avoid taking on more student debt than you need to earn your degree. If you’ve already borrowed student loans, refinancing may help you qualify for a lower interest rate and better terms. Lantern can help you compare student loan refinancing options from multiple lenders all at one so that you can choose the best option for you.

Frequently Asked Questions

Can you use student loans for rent?
Can you use both private and federal student loans for living expenses?
How much of your student loans can you use for rent?
Photo credit: iStock/AnnaStills

About the Author

Rebecca Safier

Rebecca Safier

Rebecca Safier has nearly a decade of experience writing about personal finance. Formerly a senior writer with LendingTree and Student Loan Hero, she specializes in student loans, financial aid, and personal loans. She is certified as a student loan counselor with the National Association of Certified Credit Counselors (NACCC).
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